European Cities Top Quality-of-Life Survey for Expats

By Roy Maurer
3/5/2014

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Vienna—Austria’s capital, known for coffee, Mozart and Schnapps—ranks No. 1 among expatriates as a city to live and work in, according to the latest global survey released by international management consultancy Mercer.

European cities took five of the top 10 spots out of 223 cities evaluated worldwide in Mercer’s 2014 Quality of Living report. Zurich occupied second place, and three German cities—Munich, Dusseldorf and Frankfurt—also made the top 10.

“European cities enjoy a high overall quality of living compared to those in other regions,” said Slagin Parakatil, senior researcher at Mercer. “Health care, infrastructure and recreational facilities are generally of a very high standard. Political stability and relatively low crime levels enable expatriates to feel safe and secure in most locations.”

Tbilisi, Georgia, at 191, is the lowest-ranking city in Europe. But Tbilisi’s quality of life continues to improve, said Parakatil, mainly due “to a growing availability of consumer goods, improving internal stability and developing infrastructure.” Other European cities ranked on the lower end of the list include Minsk, Belarus (189); Yerevan, Armenia (180); Tirana, Albania (179); and St. Petersburg, Russia (168).

Third-place Auckland, New Zealand, was the highest-ranked non-European city, while Vancouver, Canada, was ranked fifth and the highest in North America. San Francisco, at 27, was the No. 1 U.S. city; Singapore (25) was rated the best in Asia; and Dubai (73) took the top spot in the Middle East and Africa.

Setting the Right Allowances and Incentives

Quality-of-living surveys help multinational companies determine appropriate compensation packages for employees sent on international assignments. “Companies need to be able to determine their expatriate compensation packages rationally, consistently and systematically,” said Parakatil. “Providing incentives to reward and recognize the efforts that employees and their families make when taking on international assignments remains a typical practice, particularly for difficult locations.” Common incentives include a quality-of-living allowance and a mobility premium. A quality-of-living, or hardship, allowance compensates for the differences between the home and host locations. A mobility premium compensates for the inconvenience of being uprooted and having to work in another country. Factors such as political instability, high crime rates and elevated air pollution can lower quality of life, said Parakatil.

Rising Stars

This year’s survey recognized several so-called second-tier, or emerging, cities. These metropolises have been investing in their infrastructure and attracting foreign direct investments to compete with the traditional business capitals, Mercer said.

Examples include Wroclaw, Poland (ranked 107 globally), and the Amazonian city of Manaus, Brazil, due to the creation of a free enterprise zone that has attracted talent from other cities and regions, and several multinational companies planning to settle in the area.

The data for the 2014 report were collected between September and November 2013.

City living conditions were analyzed according to 39 factors, grouped into 10 categories:

Political and social environment (political stability, crime, law enforcement).

Canada Trumps U.S. Cities in North America Ranking

Canadian cities dominated Mercer’s North America ranking. Vancouver topped the regional list, followed by Ottawa (14), Toronto (15) and Montreal (23). Vancouver beat out the other top Canadian cities primarily because of their harsher winters, explained Luc Lalonde, a principal at Mercer Canada.

The region’s lowest-ranking city was Mexico City (122), preceded by four U.S. cities: Detroit (70), St. Louis (67), Houston (66) and Miami (65). Although Miami and Houston are popular destinations, factors such as crime, air pollution and traffic congestion could have affected their scores, said Lalonde.

In Central and South America, the quality of living varies substantially, according to Mercer. Pointe-à-Pitre, Guadeloupe (69), is the region’s highest-ranked city, followed by San Juan, Puerto Rico (72); Montevideo, Uruguay (77); Buenos Aires, Argentina (81); and Santiago, Chile (93).

Stable political environments, better infrastructure and pleasant climates are attractive features of cities in this region, Parakatil noted. “But many locations remain challenging due to natural disasters, such as hurricanes often hitting the region, as well as local economic inequality and high crime rates. Companies placing their workers on expatriate assignments in these locations must ensure that hardship allowances reflect the lower levels of quality of living.”

Singapore Tops Asia List

Singapore ranked highest in quality of living in Asia, followed by four Japanese cities: Tokyo (43), Kobe (47), Yokohama (49) and Osaka (57). Dushanbe, Tajikistan (209), is the lowest-ranking metropolis in the region. Mercer found that Asia’s quality-of-living standards ranged widely. So although life is continually improving in South Korea, issues such as air pollution detract from Chinese cities.

Many second-tier Asian cities have emerged as important business centers for multinational companies. Examples include Cheonan, South Korea (98), strategically located in an area where several technology companies have operations; Pune, India (139), which has developed into an education hub and home to IT and other high-tech industries; and Xian, China (141), host to financial, consulting and IT service companies.

Middle East, Africa Remain Challenging Regions for Business

At 73, Dubai was the highest-ranked city in the Middle East/Africa region, followed by Abu Dhabi, UAE (78); Port Louis, Mauritius (82); and Durban (85) and Cape Town, South Africa (90). Durban has been identified as an emerging city in this region because of the growth of its manufacturing industries and the increasing importance of its shipping port. Generally, though, this region is concentrated at the lower end of the quality-of-living rankings, with five out of the bottom six cities. Baghdad, Iraq (223), has the lowest overall ranking.

“The Middle East and, especially, Africa remain one of the most challenging regions for multinational organizations and expatriates,” said Parakatil. “Regional instability and disruptive political events—including civil unrest, lack of infrastructure, and natural disasters such as flooding—keep the quality of living from improving in many of its cities.”

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